******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of ) MM Docket No. 87-338 ) CRYSTAL COMMUNICATIONS, INC. ) File No. BPH-860918NZ ) Julio A. Villamil, Maria Elena Villamil, ) File No. BPH-860918OL Lawrence M. Wrathall and ) Nayereh E. Wrathall, d/b/a ) VILLAMIL FM RADIO ) ) CALIFORNIA COMMUNITY ) TELEVISION NETWORK ) File No. BPH-860918OO ) For Construction Permit For a ) New Commercial FM Station ) Salinas, California ) O R D E R Adopted: January 24, 1997 ; Released: January 29, 1997 By the Commission: 1. This order grants a request to vacate that was submitted in conjunction with the Joint Request for Approval of Settlement filed by Julio A. Villamil, Maria Elena Villamil, Lawrence M. Wrathall and Nayereh E. Wrathall, d/b/a Villamil FM Radio (Villamil), Crystal Communications, Inc. (Crystal), and California Community Television Network (CCTN) on May 20, 1996. Joint Comments in Support of Request to Vacate were filed by the applicants on July 11, 1996. 2. The remaining applicants in this proceeding have entered into a settlement agreement, which was approved by Order, FCC 96I-25 (OGC June 24, 1996). At the same time, they also requested that certain findings and conclusions of the Initial Decision in this case concerning Crystal (which will have no interest in the license) be vacated. This request was held in abeyance for consideration by the Commission. The Commission has held that it would, consistent with the practice of the federal courts, vacate findings of an Initial Decision in connection with a settlement. Constance J. Wodlinger, FCC 85-335, released July 10, 1985, citing United States v. Munsingwear, Inc., 340 U.S. 36, 38-40 (1950). However, the Supreme Court distinguished Munsingwear and unanimously held in U.S. Bancorp Mortgage Company v. Bonner Mall Partnership, 115 S. Ct. 386, 392 (1994), that federal courts should not automatically grant a request to vacate merely because the parties have agreed to such relief, where decisions below would become moot by reason of settlement. 3. In support of their request to vacate, the applicants point out that the Supreme Court's U.S. Bancorp ruling, which concerns the relationship between courts in the federal system where reliance is placed on a lower court's finding unless clearly erroneous, is not binding on the Commission and is inapposite for Commission proceedings where Initial Decisions are subject to de novo review. The applicants also note that there are equitable grounds for relief because Crystal has been unable to obtain a ruling on its exceptions to the Initial Decision which were filed in 1989, in light of the Public Notice, FCC Freezes Comparative Proceeding, 9 FCC Rcd 1055 (1994); because Crystal, which was represented by Tom Root during the hearing, did not receive effective assistance of counsel; and because Crystal's principal had surgery and diagnosis of cancer at the time that she certified that her application was complete, thus suggesting that the discrepancy between the dates in the application and the applicant's engineering exhibit was the result of inadvertence rather than misrepresentation. 4. Before ruling on the applicants' request, it will be helpful to consider the approach taken, before and after U.S. Bancorp, by Federal courts on requests to vacate in conjunction with settlement agreements. Some courts have summarily granted requests to vacate without explanation, but most have denied such requests. Illustrative of the latter approach is Aetna Casualty and Surety Company v. Home Insurance Company, 882 F. Supp. 1355 (S.D.N.Y. 1995), holding that, in assessing a proposed settlement conditioned on grant of a request to vacate, the court must weigh the private interests of the parties in terminating litigation by settlement against the public interest in finality of judgments, including any precedential or preclusive effect that they may have. Similar views were expressed in Manufacturers Hanover Trust Co. v. Yanakas, 11 F.3d 381 (2d Cir. 1993)(vacatur is not a proper use of the judicial system if it would allow a party with a deep pocket to eliminate a precedent it dislikes simply by agreeing to a sufficiently lucrative settlement); Oklahoma Radio Associates v. FDIC, 3 F.3d 1436 (10th Cir. 1993)(permitting parties to use settlement to withdraw unfavorable precedents fraught with potential for abuse); and In re United States, 927 F.2d 626 (D.C. Cir. 1991)(judicial system ought not allow social value of precedent, created at a cost to the public and other litigants, to be a bargaining chip in the process of settlement). 5. In essence, federal courts generally reject requests to vacate to preserve precedents and to prevent litigants from unfairly avoiding preclusive effects of an adverse decision by merely entering into a settlement. In this regard, an Initial Decision in a Commission proceeding, even if permitted to become final without review, does not establish a precedent that is binding on the agency in some future case. See Public Notice, FCC 61-25, 20 RR 1141, Jan. 6, 1961. However, a decision of the former Review Board or the Commission that becomes moot because of a settlement would be given precedential weight unless a request to vacate has been granted. More importantly, any decision, whether issued by an ALJ, Review Board or the Commission, that is not subject to further review because of a settlement would be entitled to protection against collateral attack, unless a request to vacate has been granted. See Shawn Phalen, 7 FCC Rcd 7638, 7639  9 (1992)(absent vacatur, findings and conclusions of decision that is unreviewed because of settlement would be final and binding as to parties in that decision). Thus, an applicant that has been disqualified in an Initial Decision could show rehabilitation or other post-decision mitigating circumstances, but it could not relitigate the underlying adverse findings. RKO General Inc. (WAXY-FM), 5 FCC Rcd 642 (1990). 6. In light of this analysis, the factors leading federal courts to refuse to approve settlements that involve requests to vacate are also pertinent for the Commission's assessment of requests for such relief. Indeed, the reasons given by the federal courts for denial of requests to vacate lead us to conclude that the Commission should generally deny requests to vacate unless the parties make a showing of some special circumstances beyond the mere fact that the case has been settled. See, e.g., A.L.Mechling Barge Lines, Inc. v. United States, 368 U.S. 324 (1961)(vacatur appropriate when losing party has lost its right, through no fault of its own, to have judgment reviewed). As to the showing made by the applicants in this case, the contention concerning the inability of Crystal to obtain a ruling on its exceptions to the Initial Decision is a factor that, in our view, warrants an exception to the general approach set forth above. The Freeze on Comparative Proceedings, which was an unforeseeable circumstance, has precluded the prompt processing of applications and caused hardship to affected applicants, as well as impeding the initiation of new broadcast service. Under these circumstances, we are persuaded that the public interest would be served by giving favorable consideration to routine requests to vacate filed in conjunction with settlement agreements involving applicants, as here, that are subject to the Freeze on Comparative Proceedings. 7. ACCORDINGLY, IT IS ORDERED, That the request to vacate findings and conclusions of the Initial Decision filed by Julio A. Villamil, Maria Elena Villamil, Lawrence M. Wrathall and Nayereh E. Wrathall, d/b/a Villamil FM Radio, Crystal Communications, Inc., and California Community Television Network in their May 20, 1996 Joint Request for Approval of Settlement IS GRANTED; that paragraphs 39-45 and 83-86 of the Initial Decision, 4 FCC Rcd 2762 (ALJ 1989), in this proceeding ARE VACATED; and that this proceeding IS TERMINATED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary